Item 1.01 Entry into a Material Definitive Agreement
The Merger Agreement
On May 6, 2021 (the "Agreement Date"), Bill.com Holdings, Inc. ("Bill.com" or
the "Company") entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Delano Merger Sub I, Inc., a Delaware corporation and direct,
wholly owned subsidiary of Bill.com ("Merger Sub I"), Delano Merger Sub II, LLC,
a Delaware limited liability company and direct, wholly owned subsidiary of
Bill.com ("Merger Sub II" and together with Merger Sub I, the "Merger Subs"),
DivvyPay, Inc., a Delaware corporation ("DivvyPay"), and Shareholder
Representative Services LLC, a Colorado limited liability company (in its
capacity as the equityholder's agent).
Upon the consummation of the transactions contemplated by the Merger Agreement
(the "Closing"), Merger Sub I will merge with and into DivvyPay, with DivvyPay
surviving as a wholly owned subsidiary of Bill.com, and immediately thereafter,
as part of the same overall integrated transaction, DivvyPay will merge with and
into Merger Sub II, pursuant to which Merger Sub II will survive and remain a
direct wholly owned subsidiary of Bill.com (such transactions, collectively or
in seriatim, the "Merger").
Pursuant to the terms and subject to the conditions set forth in the Merger
Agreement, including customary purchase price adjustments, the aggregate
consideration Bill.com will pay and issue upon the Closing in exchange for all
of the outstanding equity interests of DivvyPay is approximately $2.5 billion,
with approximately $625 million payable in cash (the "Cash Consideration"),
subject to adjustments, and the remainder issuable in shares of Bill.com's
common stock ("Shares"), options to acquire Shares and restricted stock units
covering Shares (the "Share Consideration" and, together with the Cash
Consideration, the "Merger Consideration"). The Share Consideration will be
calculated based on a fixed value of $157.2697 per Share (the "Share Price"),
which represents the average of the daily volume-weighted average sales price
per Share for each of the twenty consecutive trading days ending on and
including May 3, 2021. The Merger Consideration assumes that DivvyPay will have
$125 million in cash as of the Closing (the "Cash Target"), and the Cash
Consideration will be adjusted for amounts above or below such Cash Target, with
the Cash Target being reduced at a rate of $3.5 million per month if the Closing
occurs after July 1, 2021.
In addition, pursuant to the terms and subject to the conditions set forth in
the Merger Agreement, Bill.com will grant 953,776 RSUs under the 2019 Equity
Incentive Plan (the "Employee RSUs") to certain employees of DivvyPay who will
continue as employees of Bill.com or its subsidiaries, including the surviving
entity in the Merger ("Continuing Employees"), of which 635,850 will be granted
to Blake Murray, DivvyPay's chief executive officer. The Employee RSUs will vest
over three years from the applicable vesting commencement date (which will occur
within one fiscal quarter of Bill.com after the Closing), with one-third vesting
on the one-year anniversary of such vesting commencement date, and the remainder
vesting quarterly thereafter.
At the effective time of the Merger, all outstanding shares of DivvyPay's
capital stock and warrants will be cancelled and converted into the right to
receive a pro rata portion of the Merger Consideration, except that shares of
DivvyPay capital stock held by unaccredited stockholders may convert into the
right to receive cash in lieu of the Share Consideration. All options to acquire
DivvyPay's common stock ("DivvyPay Options") outstanding as of immediately prior
to the effective time of the Merger will be treated as follows: (i) all vested
and unvested DivvyPay Options that were granted prior to May 1, 2019 and are
held by a Continuing Employee will be cancelled and the holder thereof will be
entitled to receive cash equal to the value of such options (other than such
options that are unvested and held by certain key employees, which will be
cancelled for no consideration), (ii) all vested and unvested DivvyPay Options
that were granted on or after May 1, 2019 and are held by Continuing Employees
will be assumed by Bill.com, (iii) all other vested DivvyPay Options will be
cancelled and the holder thereof will be entitled to receive cash equal to the
value of such option and (iv) all other unvested DivvyPay Options will be
cancelled for no consideration.
The Merger Agreement contains customary representations, warranties and
covenants by DivvyPay and Bill.com.
Bill.com and DivvyPay's obligations to consummate the Merger are subject to
customary closing conditions, including, among other things, (i) the adoption of
the Merger Agreement and approval of the Merger in accordance with Delaware law,
(ii) the expiration or termination of the applicable waiting period under the
Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (iii) the accuracy of certain representations and warranties made by the
other party in the Merger Agreement (subject to certain materiality exceptions),
(iv) the other party's material compliance with its covenants set forth in the
Merger Agreement and (v) the absence of a material adverse effect with respect
to the other party. Bill.com's obligations to consummate the Merger are also
subject to (i) the execution of the Joinder Agreements (as defined below) by
stockholders holding at least 90% of DivvyPay's outstanding shares, (ii) the
continued effectiveness of certain agreements entered into with key employees of
DivvyPay in connection with the execution of the Merger Agreement and the
retention of 90% of DivvyPay employees and (iii) DivvyPay's delivery of audited
financial statements for its fiscal year ended December 31, 2020.
. . .
Item 2.02 Results of Operations and Financial Condition.
On May 6, 2021, the Company issued a press release and will hold a conference
call regarding its financial results for the third fiscal quarter ended March
31, 2021. A copy of the press release is furnished as Exhibit 99.1 to this
report.
The information furnished with this Item 2.02, including Exhibit 99.1, shall not
be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, or otherwise subject to the liabilities of that section, nor
shall it be deemed incorporated by reference into any other filing under the
Securities Act of 1933, as amended, except as expressly set forth by specific
reference in such a filing.
The Company is making reference to non-GAAP financial information in both the
press release and the conference call. A reconciliation of GAAP to non-GAAP
results is provided in the attached Exhibit 99.1 press release.
The Company announces material information to the public through a variety of
means, including filings with the Securities and Exchange Commission, press
releases, public conference calls, and Bill.com's investor relations website
(https://investor.bill.com) as means of disclosing material non-public
information and for complying with its disclosure obligations under Regulation
FD.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth in Item 1.01 of this Current Report on Form 8-K is
incorporated by reference into this Item 3.02.
Item 8.01 Other Events.
On May 6, 2021, Bill.com and DivvyPay issued a joint press release announcing
that they had entered into the Merger Agreement. A copy of the joint press
release is attached hereto as Exhibit 99.2 and is incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Description
99.1 Press release dated May 6, 2021
99.2 Press release dated May 6, 2021
104 Cover Page Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document.
Use of Forward-Looking Statements
This communication contains "forward-looking statements" within the meaning of
federal securities laws. Forward-looking statements may contain words such as
"believes", "anticipates", "estimates", "expects", "intends", "aims",
"potential", "will", "would", "could", "considered", "likely" and words and
terms of similar substance used in connection with any discussion of future
plans, actions or events identify forward-looking statements. All statements,
other than historical facts, including statements regarding the expected timing
of the closing of the proposed transaction and the expected benefits of the
proposed transaction, are forward-looking statements. These statements are based
on management's current expectations, assumptions, estimates and beliefs. While
Bill.com believes these expectations, assumptions, estimates and beliefs are
reasonable, such forward-looking statements are only predictions, and are
subject to a number of risks and uncertainties that could cause actual results
to differ materially from those described in the forward-looking statements.
The following factors, among others, could cause actual results to differ
materially from those described in the forward-looking statements: (i) failure
of DivvyPay to obtain stockholder approval as required for the proposed
transaction; (ii) failure to obtain governmental and regulatory approvals
required for the closing of the proposed transaction, or delays in governmental
and regulatory approvals that may delay the transaction or result in the
imposition of conditions that could reduce the anticipated benefits
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from the proposed transaction or cause the parties to abandon the proposed
transaction; successful completion of the proposed transaction; (iii) failure to
satisfy the conditions to the closing of the proposed transactions; (iv)
unexpected costs, liabilities or delays in connection with or with respect to
the proposed transaction; (v) the effect of the announcement of the proposed
transaction on the ability of Bill.com or DivvyPay to retain and hire key
personnel and maintain relationships with customers, suppliers and others with
whom Bill.com or DivvyPay does business, or on Bill.com's or DivvyPay's
operating results and business generally; (vi) the outcome of any legal
proceeding related to the proposed transaction; (vii) the challenges and costs
of integrating, restructuring and achieving anticipated synergies and benefits
of the proposed transaction and the risk that the anticipated benefits of the
proposed transaction may not be fully realized or take longer to realize than
expected; (vii) competitive pressures in the markets in which Bill.com and
DivvyPay operate; (viii) the occurrence of any event, change or other
circumstances that could give rise to the termination of the merger agreement;
and (ix) other risks to the consummation of the proposed transaction, including
the risk that the proposed transaction will not be consummated within the
expected time period or at all. Additional factors that may affect the future
results of Bill.com are set forth in its filings with the SEC, including each of
Bill.com's most recently filed Annual Report on Form 10-K, subsequent Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the
SEC, which are available on the SEC's website at www.sec.gov. Readers are urged
to consider these factors carefully in evaluating these forward-looking
statements, and not to place undue reliance on any forward-looking statements.
Readers should also carefully review the risk factors described in other
documents that Bill.com files from time to time with the SEC. The
forward-looking statements in these materials speak only as of the date of these
materials. Except as required by law, Bill.com assumes no obligation to update
or revise these forward-looking statements for any reason, even if new
information becomes available in the future.
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